Additionality: According to the Kyoto Protocol, emission reductions generated by Clean Development Mechanism and Joint Implementation project activities must be additional to those that otherwise would occur.
Additionality is established when there is a positive difference between the emissions that occur in the baseline scenario, and the emissions that occur in the proposed project.
Afforestation: The process of establishing and growing forests on bare or cultivated land, which has not been forested in recent history.
Assigned Amount Unit (AAU): Annex I Parties are issued AAUs up to the level of their assigned amount, corresponding to the quantity of greenhouse gases they can release in accordance with the Kyoto Protocol (Art.
3), during the first commitment period of that protocol (2008-12). AAUs equal one tCO2e.
Avoided Deforestation: Preventing deforestation by compensating countries for carbon dioxide reductions realized by maintaining their forests.
Banking or carry over: Compliance units under the various schemes to manage GHG emissions in existence may or may not be carried over from one commitment period to the next. Some restrictions on the amount of units that can be carried over may apply: for instance, AAUs may be banked with no restriction by a Kyoto Party while the amount of CERs that can be carried over is limited to 2.5% of the assigned amount of each Party.
Baseline: The emission of greenhouse gases that would occur without the contemplated policy intervention or project activity.
Biomass Fuel: Combustible fuel composed of a biological material, for example, wood or wood by-products, rice husks, or cow dung.
California Climate Action Registry (CCAR): Non-profit organization formed by the State of California that serves as a voluntary greenhouse gas registry to promote early actions to reduce GHG emissions by organizations.
It develops notably protocol and tools to measure and verify GHG emissions and emission reductions.
Carbon Asset: The potential of greenhouse gas emission reductions that a project is able to generate and sell.
Carbon Finance: Resources provided to projects generating (or expected to generate) greenhouse gas (or carbon) emission reductions in the form of the purchase of such emission reductions.
Carbon Dioxide Equivalent (CO2e): The universal unit of measurement used to indicate the global warming potential of each of the six greenhouse gases. Carbon dioxide — a naturally occurring gas that is a byproduct of burning fossil fuels and biomass, land-use changes, and other industrial processes — is the reference gas against which the other greenhouse gases are measured.
Carbon Pollution Reduction Scheme (CPRS): the Australian ETS, aiming to reduce emissions between 5
% and 15% below 2000 levels by 2020 (or more). Draft bill is under consultation.
Certified Emission Reductions (CERs): A unit of greenhouse gas emission reductions issued pursuant to the Clean Development Mechanism of the Kyoto Protocol, and measured in metric tonnes of carbon dioxide equivalent. One CER represents a reduction of greenhouse gas emissions of one tCO2e.
Chicago Climate Exchange (CCX): Members to the Chicago Climate Exchange make a voluntary but legally binding commitment to reduce GHG emissions in 2010 by 6% below a baseline period of 1998-2001.
Clean Development Mechanism (CDM): The mechanism provided by Article 12 of the Kyoto Protocol, designed to assist developing countries in achieving sustainable development by permitting industrialized countries to finance projects for reducing greenhouse gas emission in developing countries and receive credit for doing so.
Conference of Parties (COP): The Meeting of Parties to the United Nations Framework Convention on Climate Change.
Eligibility Requirements: There are six Eligibility Requirements for Participating in Emissions Trading (Art. 17) for Annex I Parties. Those are: (i) being a Party to the Kyoto Protocol, (ii) having calculated and recorded one’s Assigned Amount, (iii) having in place a national system for inventory, (iv) having in place a national registry, (v) having submitted an annual inventory and (vi) submit supplementary information on assigned amount. An Annex I party will automatically become eligible after 16 months have elapsed since the submission of its report on calculation of its assigned amount. Then, this Party and any entity having opened an account in the registry can participate in Emissions Trading. However, a Party could lose its eligibility if the Enforcement Branch of the Compliance Committee has determined the Party is non-compliant with the eligibility requirements.
Emission Reductions (ERs): The measurable reduction of release of greenhouse gases into the atmosphere from a specified activity or over a specified area, and a specified period of time.
Emission Reductions Purchase Agreement (ERPA):
Agreement which governs the purchase and sale of emission reductions.
Emission Reduction Units (ERUs): A unit of emission reductions issued pursuant to Joint Implementation. This unit is equal to one metric ton of carbon dioxide equivalent.
European Union Allowances (EUAs): the allowances in use under the EU ETS. An EUA unit is equal to one metric ton of carbon dioxide equivalent.
European Union Emission Trading Scheme (EU ETS): The EU ETS was launched on January 1, 2005 as the cornerstone of EU climate policy towards its Kyoto commitment and beyond. It regulates emissions from energy-intensive installations. Over 2008-12, emissions are capped on average at 6% below 2005 levels, further decreasing to 21% by 202o, or further in the event of a satisfactory international climate change agreement.
Gold Standard: The Gold Standard certification applies to renewable energy and energy efficiency offset projects that contribute significantly to sustainable development.
Grandfathering: Allocation mechanism on the basis of historical emissions (as opposed to performance-based allocation approaches, or benchmarking).
Green Investment Scheme: A financing mechanism in which the proceeds from emissions trading under the Kyoto Protocol are reinvested in projects in the host country’s economy with the objective of further reducing emissions.
Greenhouse gases (GHGs): These are the gases released by human activity that are responsible for climate change and global warming. The six gases listed in Annex A of the Kyoto Protocol are carbon dioxide (CO2), methane (CH4), and nitrous oxide (N20), as well as hydrofluorocarbons (HFC-23), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
High quality emission reductions: Emission reductions of a sufficient quality so that, in the opinion of the Trustee, at the time a project is selected and designed, there will be a strong likelihood, to the extent it can be assessed, that PCF Participants may be able to apply their share of emission reductions for the purpose of satisfying the requirements of the UNFCCC, relevant international agreements, or applicable national legislation.
Host Country: The country where an emission reduction project is physically located.
International Transaction Log (ITL): the ITL connects together the national registries and the CDM registry and is in charge of verifying the validity of transactions (issuance, transfer and acquisition between registries, cancellation, expiration and replacement, retirement and carry-over). It came live in November 2007 while EU as a whole connected in October 2008.
Joint Implementation (JI): Mechanism provided by Article 6 of the Kyoto Protocol, whereby a country included in Annex I of the UNFCCC and the Kyoto Protocol may acquire Emission Reduction Units when it helps to finance projects that reduce net emissions in another industrialized country (including countries with economies in transition).
Kyoto Mechanisms (KMs): the three flexibility mechanisms that may be used by Annex I Parties to the Kyoto Protocol to fulfill their commitments through emissions trading (Art. 17). Those are the Joint Implementation (JI, Art. 6), Clean Development Mechanism (CDM, Art. 12) and trading of Assigned Amount Units (AAUs).
Kyoto Protocol: Adopted at the Third Conference of the Parties to the United Nations Convention on Climate Change held in Kyoto, Japan in December 1997, the Kyoto Protocol commits industrialized country signatories to reduce their greenhouse gas (or “carbon”) emissions by an average of 5.2% compared with 1990 emissions, in the period 2008-2012.
Land Use, Land-Use Change and Forestry (LULUCF): A greenhouse gas inventory sector that covers emissions and removal of greenhouse gases resulting from direct human-induced land use, land-use change and forestry activities. Expanding forests reduce atmospheric carbon dioxide; deforestation releases additional carbon dioxide; various agricultural activities may add to atmospheric levels of methane and nitrous oxide.
Leakage: Process by which emitters relocate activities to avoid regulation.
Monitoring Plan (MP): A set of requirements for monitoring and verification of emission reductions achieved by a project.
National Allocation Plans (NAPs): The documents, established by each Member State and reviewed by the European Commission, that specify the list of installations under the EU ETS and their absolute emissions caps, the amount of CERs and ERUs that may be used by these installations as well as other features such as the size of the new entrants reserve and the treatment of exiting installations or the process of allocation (free allocation or auctioning).
New South Wales Greenhouse Gas Abatement Scheme (NSW GGAS): Operational since 1st January 2003 (to last at least until 2012), the NSW Greenhouse Gas Abatement Scheme aims at reducing GHG emissions from the power sector. It is expected to end upon the commencement of the CPRS.
Offsets: Offsets designate the emission reductions from project-based activities that can be used to meet compliance – or corporate citizenship – objectives vis-à-vis greenhouse gas mitigation.
Operational Entity (OE): An independent entity, accredited by the CDM Executive Board, which validates CDM project activities, and verifies and certifies emission reductions generated by such projects.
Pre-Certified Emission Reductions (pre-CERs): A unit of greenhouse gas emission reductions that has been verified by an independent auditor but that has not yet undergone the procedures and may not yet have met the requirements for registration, verification, certification and issuance of CERs (in the case of the CDM) or ERUs (in the case of JI) under the Kyoto Protocol. Buyers of VERs assume all carbon-specific policy and regulatory risks (i.e., the risk that the VERs are not ultimately registered as CERs or ERUs). Buyers therefore tend to pay a discounted price for VERs, which takes the inherent regulatory risks into account.
Primary transaction: A transaction between the original owner (or issuer) of the carbon asset and a buyer.
Programme of Activities: Emission reductions that are achieved by multiple verifiable activities executed over time as a direct response to a government measure or private sector initiative. Programmes typically result in a multitude of greenhouse gas-reducing activities in multiple sites over the life of the programme.
Project-Based Emission Reductions: Emission reductions that occur from projects pursuant to JI or CDM (as opposed to “emissions trading” or transfer of assigned amount units under Article 17 of the Kyoto Protocol).
Project Design Document (PDD): A project specific document required under the CDM rules which will enable the Operational Entity to determine whether the project (i) has been approved by the parties involved in a project, (ii) would result in reductions of greenhouse gas emissions that are additional, (iii) has an appropriate baseline and monitoring plan.
Project Idea Note (PIN): A note prepared by a project proponent regarding a project proposed for PCF. The Project Idea Note is set forth in a format provided by the PCF and available on its website www.
prototypecarbonfund.org.
Reducing Emissions from Deforestation and Forest Degradation (REDD): A set of strategies and incentives (including performance-based) for reducing emissions from deforestation and degradation.
Reforestation: This process increases the capacity of the land to sequester carbon by replanting forest biomass in areas where forests have been previously harvested.
Regional Greenhouse Gas Initiative (RGGI): RGGI targets CO2 emissions from power sector in ten U.S.
Northeast and Mid-Atlantic states, with a target of 10%
below current levels by 2020.
Registration: The formal acceptance by the CDM Executive Board of a validated project as a CDM project activity.
Secondary transaction: A transaction where the seller is not the original owner (or issuer) of the carbon asset.
Sequestration: Sequestration refers to capture of carbon dioxide in a manner that prevents it from being released into the atmosphere for a specified period of time.
Supplementarity: Following the Marrakesh Accords, the use of the Kyoto mechanisms shall be supplemental to domestic action, which shall thus constitute a significant element of the effort made by each Party to meet its commitment under the Kyoto Protocol.
However there is no quantitative limit to the utilization of such mechanisms. While assessing the NAPs, the European Commission considered that the use of CDM and JI credits could not exceeded 50% of the effort by each Member State to achieve its commitment.
Supplementarity limits may thus affect demand for some categories of offsets.
United Nations Framework Convention on Climate Change (UNFCCC): The international legal framework adopted in June 1992 at the Rio Earth Summit to address climate change. It commits the Parties to the UNFCCC to stabilize human induced greenhouse gas emissions at levels that would prevent dangerous manmade interference with the climate system.
Validation: The assessment of a project’s Project Design Document, which describes its design, including its baseline and monitoring plan, by an independent third party, before the implementation of the project against the requirements of the CDM.
Verified Emission Reductions (VERs): A unit of greenhouse gas emission reduction that has been verified by an independent auditor. This designates emission reductions units that are traded on the voluntary market.
Verification Report: A report prepared by an Operational Entity, or by another independent third party, pursuant to a Verification, which reports the findings of the Verification process, including the amount of reductions in emission of greenhouse gases that have been found to have been generated.
Voluntary Carbon Standard (VCS): One of the standards in existence in the voluntary market.